Shell retiree sits on Board that will decide if company can wait weeks to cap offshore blowouts

KJIPUKTUK (Halifax) -- The final decision on if Shell Canada is allowed to wait 21 days before capping any blowouts at a deep-water drilling site off the coast of Nova Scotia will be made by the CEO of a board that includes a former Shell employee as one of its members.

A federal appointee to the Canada-Nova Scotia Offshore Petroleum Board (C-NSOPB), Doug Gregory, was employed by Shell for over 30 years, and opened the company's Halifax exploration office, where he focused on deep-sea exploration.

A spokesperson for the Board said they could not comment on "conflict-of interest matters”, directing questions to the federal government, who in turn directed questions back to the Board.

The spokesperson noted that Gregory would not be making the final decision on if Shell will be granted 21 days to cap any blowout. Instead that decision will be made by Stuart Pink, the CEO of the C-NSOPB, who has previously worked for subsidiaries of another oil company, TransCanada.

In June, 2015, Canada’s Environment Minister Leona Aglukkaq signed off on a plan by Shell Canada that grants the oil company 21 days to cap any subsea blowouts of pressurized oil at exploratory drilling sites in the Shelburne Basin, located 250 km south of Halifax. But before drilling can go ahead it requires the approval of the C-NSOPB, which regulates offshore drilling.

“The [Board] will only authorize Shell Canada’s proposed drilling program once it is satisfied that they are taking all reasonable precautions to ensure that the program proceeds safely and in a manner that protects the environment,” reads a statement on the Board's website.

“That is a leap of faith” says Mark Butler of Ecology Action Centre. He believe the Board was “set up to ensure that the regulation of the industry remained in friendly hands, and that the process for approvals was streamlined, so that neither the fisheries industry or environmental groups got in the way of the development of Nova Scotia offshore [resources].”

The C-NSOPB is a joint agency of the Governments of Canada and Nova Scotia, and is responsible for the regulation of petroleum drilling and exploration activities in the Nova Scotia Offshore Area. This activity includes both offshore platforms actively extracting gas and pumping them back to shore through an underwater pipeline, and exploration for subterranean reservoirs of oil and gas.

In recent years both BP and Shell were both awarded exploration permits for offshore areas. Shell was granted an exploration permit for a 19,845 sq km of sea floor, an area almost twice the size of Cape Breton. It is within the area that Shell hopes to conduct exploratory drilling.

The Canadian Environmental Assessment Agency has approved the plan to allow Shell three weeks to cap a potential blow out. Critics have pointed out that similar operations, such as the Chukchi Sea offshore Alaska project, is required to have a vessel carrying capping equipment to be on-site within 24 hours. However, Shell would be able to save money, if they don’t have all the equipment to cap a well readily available, and instead shipped it from Norway if it was needed.

The C-NSOPB is expected to make a decision on if the project can proceed in the fourth quarter of this year. This may mean that the decision may be delayed until after the federal election.

Butler believes that Gregory’s role on the Board raises concerns about a conflict of interest, but doesn’t think that his situation is unique.

“Unfortunately, he is not alone in having some connection or favourable disposition to the oil and gas industry,” says Butler, “Many of the board and staff, come from and could return to the petroleum industry raising serious questions about their independence”.

Gregory was first appointed to the Board by the Harper government in 2007, as a full member, and in 2014 he was reappointed as an alternate member, which means he only votes when other board members are not able to attend meetings.

Gregory has full voting rights on Board committees, and has served as Chair of its Health, Safety and Environment Advisory Committee, which was set up following BP’s 2010 Deep Water Horizon Disaster.

Retired oil company officials being appointed to the various boards that regulate offshore drilling and exploration is not unique to Nova Scotia; at present the Chair and CEO of the Canada – Newfoundland and Labrador Offshore Petroleum Board, Scott Tessier, is a retired employee of Chevron, an oil company that is also involved in Canadian offshore exploration.

The National Energy Board, which regulates offshore drilling in the arctic, also has several appointees with a history of working for oil and gas companies.

“These board are in a conflict of interest given that they have this dual role of encouraging an orderly development of our offshore, and protecting the environment,” says Butler. “Those are often two opposing tasks. I think people say ‘oh great, we are going to drill we are going to get the jobs and benefits. I don’t think the public realizes things can go wrong out there.”

At least seven spills took place in Nova Scotia waters in the last year. The largest of these released 1000 litres of diesel from an Encana vessel. However this spill is small compared to the potential release from a blowout.

In 1984, a blowout occurred at a Shell exploratory gas drilling operation in Nova Scotia waters, leaking 70 million cubic feet of gas into the ocean, enough to fill more 795 Olympic size swimming pools, before it was capped 13 days later.

“When you are drilling offshore, particularly in deep waters the risk goes up,” says Butler. “And I know the probability is still low, but you are taking a risk with your fishery and you coastline, whenever you are drilling out there.”